In This Week’s Issue…

by Alexander Kalis | Managing Partner & Head of Investments at Milltrust International 

Landslide Victory in Russia, China Reduces Treasuries, Brazil Eases; US Tightens, and Kuwait Diversifies

Congratulations Vladimir!

Russian President Vladimir Putin won a landslide victory in a tightly controlled election and claimed a renewed mandate for his escalating confrontation with the West. With almost all ballots counted, the Kremlin’s longest-serving leader since Soviet dictator Joseph Stalin gained a record 77 percent support, handing him a new six-year term. Putin, 65, barely campaigned before Sunday’s vote, which was marred by opposition allegations of fraud, and faced no real competition in a contest that even some of his seven rival candidates described as a farce.

China Reduces Treasuries

China’s holdings of Treasuries fell to the lowest level since July as investors soured on U.S. fixed-income securities and the dollar at the start of the year. China’s portfolio of U.S. bonds, notes and bills sank to $1.17 trillion in January from $1.18 trillion a month earlier, according to Treasury Department data released Thursday. China remains the largest foreign creditor to the U.S., followed by Japan, whose holdings rose for the first month since July, to $1.07 trillion from $1.06 trillion. Threats by Trump to crack down on trade with China have sparked concerns that the Asian nation could use American debt as a tool for retaliation.

Brazil Eases; US Tightens

Brazil’s central bank cut interest rates to an all-time low on Wednesday and unexpectedly signaled it is likely to pursue another reduction at its May meeting as inflation continues to underwhelm. Indeed, double-digit unemployment rates and widespread idle capacity have kept a lid on price hikes as the economy recovers from its deepest recession in decades at an uneven pace.

This contrasts with US policy where Federal Reserve officials, meeting for the first time under Chairman Jerome Powell, raised the benchmark lending rate by a quarter-point yesterday, and forecast a steeper path of hikes in 2019 and 2020, citing an improving economic outlook. Policy makers continued to project a total of three increases this year.

KUWAIT DIVERSIFYING

Kuwait is now revisiting plans to transform itself into a regional business hub, as authorities aim to overcome past obstacles to join neighbors seeking to overhaul their oil-dependent economies.

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